As far as the Sequestration bill goes, The President has said "it will not happen." and Nancy Pelosi chimed in with: "This is really silly. It's not serious." Chances are, given a more contrite and cooperative political climate, it won't happen. Given the mood of the country, if Members of Congress begin the shenanigans again, it'll likely be political suicide for them; at least I don't think either party is going to risk digging their heels in to an intractable extent.

As far as a tax hike mandated by Obamacare, tax increases of various varieties are inevitable. And, the only way to deal with the deficit is to reduce spending and raise additional revenue. The market knows this, the people know this, and both political parties know this. This is what will happen.

I agree that if the country does go off the figurative fiscal cliff the market is likely to react, but to what extent ? I wouldn't count on it happening. Though, I for one, will be buying if it does.

As far as dividend tax-hikes go, as I said, there's nowhere obvious to run for better interest rates. If you hold dividend stocks in retirement for income, you're not likely to dump them all because of a tax hike. Mutual funds aren't likely to dump them because those who have shares in the funds pay the taxes on dividends and capital gains, and not the mutual fund companies.

Denny,

I don't understand your comment. I doubt anybody else does either. Very high income individuals are a very small minority of the population. Period. And, as election results suggest, their money doesn't go as far as some of them would like in buying elections. The conversation isn't about arguing taxes, it's about how increased tax rates, and more specifically, taxes on dividends, might impact stock market behavior.

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